The safe-haven US Dollar edged toward a seventh consecutive daily decline on Tuesday as markets positioned for the possibility of a diplomatic breakthrough in the Middle East, even as energy flows through the Gulf remained largely disrupted.
During Asian trading hours, the greenback moved between steady and slightly weaker against most major currencies after broad losses overnight. It was last down 0.3% at 159.02 Yen at the time of writing, while holding broadly unchanged against the Euro at $1.1768.
Reuters news agency reported that negotiations between Washington and Tehran remain ongoing, while US Vice President JD Vance said in an interview on Monday that the White House expects progress on reopening the strategically vital Strait of Hormuz, which typically carries about one-fifth of global energy shipments.
The US Dollar index, which tracks the greenback against a basket of six major currencies, edged slightly lower to 98.31, close to its weakest level since 2nd March, the first trading session after the US–Israel war with Iran began.
A seven-day decline in the index would mark its longest losing streak since December, when markets were positioning for a year of US interest rate cuts and a broader weakening of the world’s reserve currency.
Elsewhere, the New Zealand Dollar held near $0.5871, while the Australian Dollar edged close to 71 cents, touching its strongest level in almost a month.
US President Donald Trump said the US military had begun blocking ships departing Iranian ports on Monday, although he added that Iran had reached out and was seeking a potential deal.
However, the Japanese Yen remains under pressure, with analysts warning it could face further selling as concerns grow that Japan’s trade balance may weaken if elevated crude oil prices persist.
Meanwhile, expectations for a Bank of Japan (BOJ) interest rate hike this month, previously seen as highly likely, have diminished, as the conflict keeps markets volatile and clouds the economic outlook.
Interest rate swaps on Tuesday priced in just a 32% probability of the BOJ raising interest rates this month, down sharply from 57% on Friday, according to Tokyo Tanshi data.
Markets view 160 Yen per Dollar as a key threshold that could increase the likelihood of currency intervention.